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Monday, September 26, 2022

Exterminators Ltd. announces IPO – The Morning

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Exterminators Ltd. intends to list on the “Empower Board” at the Colombo Stock Exchange (CSE) via an Initial Public Offering (IPO). The issue opens on 14 March 2022. 

The virtual investor forum is scheduled to be held on 8 March 2022 at 3.30 p.m. The offer is managed by Atarah Capital Partners, a company with a track record of successfully listing three companies in the CSE last year (2021). Exterminators Ltd. intends to offer 20% of the stake via the IPO to raise Rs. 60 million by offering 10,000,000 shares at a price of Rs. 6 per share. 

The funds raised through the IPO will be utilised to expand the company’s branch network by setting up three branches in 2022, build capacity by investing on novel equipment/technology and improve the vehicle fleet in its existing branches in Colombo and Kandy.  

The company plans to set up a premier 24×7 customer care and retail centre to market internationally renowned energy saving, non-chemical pest management, and health and safety brands. The funds will also be utilised to expand local manufacturing by further investing in “Made in Sri Lanka” products to contribute to mitigating the outflow of foreign exchange from Sri Lanka. 

Exterminators Ltd. recorded a revenue of Rs. 116 million and profit after tax (PAT) of Rs. 15 million in the financial year 2020/21. The company is to further strengthen its performance for the current 21/22 financial year and forecasted to increase PAT to approximately Rs. 26 million, which will be a 70% increase from the previous year. 

At the forecasted earnings per share (EPS) of Rs. 0.51, the price-to-earnings (P/E) multiple is 11.76. Based on audited financial statements of financial year 31 March 2021 and based on EPS of Rs. 0.37, the P/E is 16.15 times and according to interim financial statements (unaudited) and based on EPS of Rs. 0.41, the P/E is 14.59 times for the period ended 31 December 2021 (not annualised). The share issue price is offered with a discount of 17.5% and the value per share is derived using the discounted cash flow (DCF) method Rs. 7.27 per share by the manager to the offer based on their research report. 

“The company has entered a phase that requires not only capital but the recognition as a premier pest management and environmental enhancement brand. Being among the few in the world and probably the first pest management company in Asia to be listed, will have a significant impact in enhancing the brand recognition in the emerging world that will help us move into unchartered territories with minimal challenges. Listing in the Colombo Stock Exchange will be an important milestone and it will help us achieve our mid-term strategic objectives in diversifying our business beyond pest management and to create an ‘Environmental Enhancement Technology Brand’. Being a listed entity will mitigate the challenges we face to move across borders in expanding our business in the emerging world via fully or partly owned branches and/or international franchising networks in South Asia, South and East Africa, the Middle East, and Indian and Pacific Island nations. The company plans to commence the Maldives operations in 2022, and Seychelles and Botswana in 2023,” stated Exterminators Ltd. Founder/Managing Director Marlon Ferreira. 

The prospectus and application form has been available on the company’s website, the CSE website, and the website of the manager to the issue since yesterday (2).

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